I’ve recently finished a year-long stint on my employer’s “401k Committee”. We’d been searching for a new 401k plan provider in order to lower fees paid by both the company and individuals, as well as increase participants investing options. One thing we quickly learned was that many 401k providers are now offering plans that allow participants to opt out of the administrated, standard mutual-fund plan and fully control their assets using a “self-directed brokerage” option. This, in effect, gives you IRA-like control over your investments while still staying within the plan.

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I recently posted a numerical analysis that determined a retirement savings rate based on the goal that spendable income did not drop upon entering retirement. There were necessarily many assumptions that went in to this analysis, but a reader named RedG3 asked specifically about one of them: how do changes in income during working years effect that rate? I’ve been thinking through how to answer RedG3 for the last two days. That’s long enough that I figured it’s time to put some thoughts down and see what he, or others, might have to say back.

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A friend of mine recently asked my thoughts about what percentage of earned income should go towards savings, which I presumed to mean for retirement savings. I gave him an instantaneous answer (10%) without putting too much thought behind it beyond a consideration that he was young and anything more was unlikely to be achieved. However, I think this question deserves a bit deeper of an answer.

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Did you know that the IRS has announced an increase in contribution limits to retirement accounts for the tax year 2009? I recently discovered this while working on a budget for next year to help us hit our geographic independence goal, but have noticed news of it isn’t widespread.

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